Lyft Inc (LYFT - Free Report) provided a bullish update on the recent trends in ride volumes. In a SEC filing, the company revealed that rideshare rides increased 7.3% in August from July.
Amid the ongoing coronavirus concerns, the company’s rides business has been crippled as most people stay home. Although ride volumes have been gradually increasing, it is still significantly below year-ago levels. In the first two months of the third quarter, rides were down 53.6% year over year. Additionally, rideshare rides declined 53% year over year in August. Bettering this decrease, rideshare rides dropped less than 50% in the week ended Sep 6, 2020, indicating a marked improvement from the lows of April.
Lyft, which operates only in the United States and Canada, has been seeing faster recovery in the latter than in the former. For the week ended Sep 6, 2020, rideshare rides were down less than 20% year over year in Toronto.
The company stated that the anticipated reduction in driver incentives is likely to improve revenues in the third quarter of 2020.
Thanks to the month-on-month improvement in ride volumes in August, the company estimates adjusted EBITDA loss for the third quarter to be below $265 million. This is based on the assumption that spending on driver incentives, and average daily rideshare ride volumes remain unchanged in September compared to August.
On a separate note, Lyft, carrying a Zacks Rank #3 (Hold), informed that it increased its investment on Proposition 22 (Prop 22), a November ballot initiative where voters get to decide whether gig workers should be classified as employees. Apart from Lyft, it is funded by Uber (UBER - Free Report) , DoorDash and Instacart. Each of these companies has spent an additional $17.5 million on Prop 22.
Uber carries the same Zacks Rank as Lyft.
Some better-ranked stocks in the Internet - Services industry are ANGI Homeservices Inc (ANGI - Free Report) and Etsy Inc (ETSY - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of ANGI Homeservices and Etsy have rallied more than 48% and 100% respectively in a year’s time.
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